Asset managers of large manufacturing enterprises, for example, computer manufacturers, electronics manufacturers and auto manufacturers, must determine the inventory levels of components and finished products that are needed to meet target end customer service levels (i.e., the fraction of customer orders that should be received by the requested delivery dates). For such manufacturing enterprises, the delivery of a finished product to an end customer typically involves a complex network of suppliers, fabrication sites, assembly locations, distribution centers and customer locations through which components and products flow. This network may be modeled as a supply chain that includes all significant entities participating in the transformation of raw materials or basic components into the finished products that ultimately are delivered to the end customer.
Each of the steps in a supply chain involves some uncertainty. For example, for a variety of reasons (e.g., changes in product life cycles, seasonal variations in demand, and changing economic conditions), future end customer demand is uncertain. In addition, the times at which ordered raw materials and components will be received from suppliers is uncertain. To handle such uncertainty, many different statistical production planning models have been proposed to optimize production at each level of a supply chain while meeting target service level requirements. In general, there are two different categories of production planning issues: (1) consumable resource (or inventory) planning issues (e.g., planning for finished goods, raw material, or work-in-progress in a manufacturing operation); and (2) reusable resource (or capacity) planning issues (e.g., planning for machine and labor usage in a manufacturing operation).
Master production scheduling (MPS) techniques typically are used by production planners to create manufacturing inventory planning models from which schedules for finished good supplies may be built. A planner may enter forecasted or actual demand requirements (i.e., the quantity of finished goods needed at particular times) into an MPS system. The MPS system then develops a schedule for replenishing the finished goods inventory through the production or procurement of batches of finished goods to meet the demand requirements.
Manufacturing capacity planning, on the other hand, involves a different set of modeling issues, including: (1) selecting tools for producing a particular product mix and volume; (2) selecting a product mix and volume that maximizes the value of an existing tool set; and (3) determining whether additional tools should be added to an existing tool set. Typically, capacity planning issues are addressed by mathematically modeling the manufacturing process. Such models may take the form of a simple spreadsheet, a detailed discrete event simulation, or a mathematical program, such as a linear or mixed integer program. Many capacity planning systems implement various versions of rough cut capacity planning techniques, which typically involve evaluating capacity constraints at some level between the factory and machine levels (e.g., at the production line level). In operation, a planner may enter into a rough cut capacity planning system a build schedule that all may have been developed by a MPS system. The rough cut capacity planning system then determines whether sufficient resources exist to implement the build schedule. If not, the planner either must add additional capacity or develop a new build schedule using, for example, MPS techniques.
Typically, MPS and rough cut capacity scheduling procedures are repeated several times before a satisfactory build schedule (i.e., a build schedule that accommodates both inventory requirements and capacity constraints) is achieved. Once a satisfactory build schedule has been developed, the production requirements of the build schedule are supplied to a material requirements planning (MRP) system that develops a final schedule for producing finished goods. To arrive at a final production schedule, a planner may enter into the MRP system a number of production parameters, including production requirements of the build schedule, subassembly and raw materials inventory levels, bills of materials associated with the production of the finished goods and subassemblies, and information regarding production and material ordering lead times. The MRP system then produces a schedule for ordering raw materials and component parts, assembling raw materials and component parts into sub-assemblies, and assembling sub-assemblies into finished goods.